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Florida Small Business



April 26, 2018

The Great Train Race

Phillip Longman | 2/1/1996
I. Florida Maglev Consortium
2620 Cow Creek Rd., Edgewater, FL 32141 (904) 427-6643
Tony Morris, managing director.

Corporate Structure: Consortium wholly owned by American Maglev Technology of Florida, headquartered in Edgewater, and Coleman Research Corporation of Orlando, a subsidiary of Thermo Electron Corporation. Strategic partners include Delta Air Lines.

Technology: Magnetic levitation of train is achieved through use of large permanent, natural magnets on board vehicles and electrically charged guideway. Technology is essentially a "magnet gun" originally developed as part of Star Wars research.

Top Cruising Speed: Projected to be 300 mph.

Construction Schedule: First revenue service in 1999; system completed in 2004.

Travel Times: St. Petersburg to Orlando airport: 24 minutes. Tampa to Miami: One hour and 12 minutes. Miami to Orlando airport: 56 minutes.

Frequency of Departure: Every 15 minutes.

Fares: Miami to Orlando: $50. Orlando to Tampa: $26.

Projected Ridership: 31 million annually by 2010.

Financing: The state's primary commitment, in addition to right-of-way and certification expenses, would be $70 million per year for up to 30 years. The money would be earmarked for a new State Transportation Trust Fund and used to defray debt service on a series of taxable state revenue bond issues totaling $3.3 billion between 1996 and 2004. Local governments are asked to contribute a total of $458 million for construction of stations. The consortium would provide approximately $36 million in equity, cover all operating expenses, while also initially paying rent to the state for use of the guideway. Promoters project the system could become self-supporting within six years after initial operation. Once consortium's return on equity reaches 40%, it is willing to negotiate to allow state to recapture the taxpayers' investment.

Strengths: According to Don Rote, head of advanced transportation systems at the Argonne National Laboratories in Chicago, the technology being developed by the consortium is "definitely feasible." Moreover, adds Rote, "their design has the potential to lower system costs by as much as $2 million to $3 million a mile compared to other mag-lev technology." The proposed route serves a large percentage of state's population without disturbing environmentally sensitive areas. Elevated guideway over existing highway rights-of-way requires little earth-moving. Award could spawn a new mag-lev industry centered in Florida, similar in economic impact to the space program. Novelty and extremely fast schedules guarantee big ridership, assuming technology works.

Weaknesses: An August 1995 study by Arthur D. Little, commissioned by FDOT, noted that while Florida Maglev's technology was "attractive in theory, it still has to be demonstrated, and only very limited work has been done on the design of an overall transportation system." The report also characterized the company's research program as "unrealistic" and its cost estimates "not well supported." Financing could also be a problem. The company projects expenditures through 2022 exceeding $12.6 billion, which would be extremely difficult to finance if the system does not generate the $10 billion in net revenues its backers assume it will earn over the period.

Prospects: Gov. Chiles personally broke the ground on the Edgewater test site and has publicly expressed the hope that Florida will develop its own mag-lev industry. The governor's pal, Sonny Holtzman of Miami, has been signed on as a lobbyist. The company enjoys particularly strong political support in Volusia County, where it operates its test track. Promoters are trying to position themselves as Florida's home team and may well succeed with appeals to state pride.

II. Florida Magplane, Inc.
1661 Williamsburg Square, Lakeland, Florida 33803 (941) 644-2338
W. David Carrier III, president and CEO.

Corporate Structure: Florida Magplane is a privately held company created for the purposes of this project.

Technology: Uses super-conducting magnets beneath vehicle which induce traveling currents in the aluminum guideway. These currents lift the vehicle six inches above the guideway and propel it forward, in a process analogous to the way an ocean wave lifts and propels a surf board.

Top Cruising Speed: Projected to be 300 mph. Construction Schedule: Three-mile test track built within three years; St. Petersburg to Orlando service opens by 2001 and the whole system by 2004.

Travel Times: Roughly the same as Florida Maglev.

Frequency of Departure: Company promises that magplanes will run as often as every 10 minutes, with non-stop service available on demand between all points along the route. Promoters claim the system will operate more like a limousine service than an airline or railroad.

Fares: St. Petersburg to Orlando airport, $20; Tampa to Miami, $64; Miami to Orlando airport, $44.

Projected Ridership: 14 million annually upon completion of system.

Financing: Company expects state and local governments to grant easements for right-of-way and to pay for most design, engineering and certification costs, which would total $280 million during the development and construction phase. Boosters claim no other state subsidies will be required, though footnote in cash flow pro-forma submitted to the state specifies that Magplane is counting on $70 million a year in state subsidies to be "approved and available," as a "safety net." Company also plans to float $5 billion in tax exempt bonds and to offer five million shares of its stock to the public at $25 per share. Guideway systems will be built and owned by Magplane.

Strengths: If the magplane worked as advertised, it would serve more destinations in Florida, at greater speed and convenience, and at less public expense, than any other system.

Weaknesses: Will it fly? In the early 1970s, a university-industry team, including the Massachusetts Institute of Technology, Raytheon and the National Science Foundation, built and tested a 1/25th scale model of the system, but a full-scale version has never been tried. "It would take two years minimum to build a prototype," says D. Bruce Montgomery, associate director of the Plasma Fusion Center at M.I.T. and a key adviser to the project. Montgomery still believes, however, that magplanes can beat TGVs in getting into revenue service because magplanes require less right-of-way acquisition. (Montgomery is listed as Magplane director in Florida Magplane's promotional literature, but says that this is the result of a clerical error and that he is actually only a consultant.)

Prospects: Company seems unlikely to win franchise award since its technology remains unproven, but it may persuade governor and Legislature to put off a decision until the feasibility of mag-lev technology becomes clearer.

III. Florida Overland eXpress (FOX)
5950 Hazeltine National Drive, Suite 255, Orlando, FL 32822, (407) 855-3421
Eugene Skoropowski, project director.

Corporate Structure: Partnership of Fluor Daniel of Irvine California, largest publicly held U.S. engineering company; Odebrecht Contractors of Florida, a Miami-based heavy construction company; GEC Alsthom, Anglo/French locomotive manufacturer; and Quebec-based Bombardier, largest North American supplier of rail cars.

Technology: French-designed TGV high speed electric rail locomotives and train sets.

Top Recorded Speed: 320 mph. Current top scheduled speed in France: 200 mph.

Construction Schedule: Revenue service between Orlando and Tampa begins in 2003; full Miami-Orlando-Tampa system completed by 2005.

Travel Times: Tampa to Orlando attractions area: 37 minutes. Orlando airport to Miami airport: one hour and 25 minutes.

Frequency of Departure: Initially, trains would depart every half hour during peak periods, and hourly otherwise.

Fares: (coach class) Tampa to Orlando, $22; Orlando to Miami, $54; Tampa to Miami, $65.

Projected Ridership: 6.4 million passengers by 2010. Financing: FDOT responsible for all right-of-way acquisition costs, which could be substantial. Business plan calls for creation of a special tax-exempt district which would own railroad infrastructure. Under FOX's "best case scenario," the tax district would receive state subsidies totaling $7.17 billion between 1997 and 2035. The district, in turn, will use this revenue to float $6.3 billion (nominal dollars) in tax-free bonds for financing, engineering and infrastructure costs. Bonds to be repaid from fares, rent paid by the FOX consortium for the privilege of operating trains, and possibly by $428 million in loans from the state if ridership falls below a certain level. FOX forecasts the state will get its investment back, with interest, starting around 2020. In effect, state winds up owning the railroad; private investors will pay for and own rolling stock.

Strengths: Proven technology that has become hugely popular in France, capturing significant market share from airlines and earning operational profits. The consortium has deep pockets and should be able to raise all the private capital it needs. The proposed route has no highway grade crossings and will not be shared with slower freight trains. TGVs are sufficiently fast to beat airlines. TGVs also have sufficient novelty in the U.S. to perform as a tourist draw.

Weaknesses: Says Michael E. Smith of the Florida Coalition of Railroad Passengers: "The technology is great, but the route stinks." No direct access to downtown Miami, Fort Lauderdale, Orlando or St. Petersburg, though company promises to provide convenient bus and limo connections. Audubon Society objects to its proposed route through the environmentally sensitive Kissimmee Prairie, which it says is virtually the last un-diked area of the Everglades. Success in France may not be replicated in Florida due to lower gas prices and air fares, fewer direct rights-of-way, lower population densities and inferior mass transit connections. Project has high start-up costs compared to other rail proposals and a long wait until start of service.

Prospects: FOX is the front-runner according to most close observers, due to its proven technology, extensive lobbying and public relations efforts. Still, FOX's high cost, lack of penetration into major population centers in Florida and a perception that the consortium is dominated by French interests could create political problems.

IV. Italferr-sis, t.a.v., s.p.a.
U.S. representative, Martin Stein;
52 Cranberry Lane, Needham, MA 02192-1422 (617) 444-0213.

Corporate Structure: Italferr-sis, t.a.v., S.p.A., is the consulting engineering subsidiary of the Italian State Railways.

Technology: Company states that further study is needed to pick appropriate technology, though a likely choice would be the Italian "Pendolino" tilt train running on existing lines.

Travel Times: Use of conventional electric locomotives on existing lines would allow a travel time of two hours and 30 minutes between Orlando and Miami. Use of "Pendolino" train would save 20 minutes of travel time, but roughly double infrastructure costs.

Fares: Not specified, but company stresses that use of conventional trains or even "Pendolino" will allow for lower fares than on French TGV or mag-levs.

Projected Ridership: Not specified in application, but principals believe real demand is much lower than projected by other applicants - only about 8,000 passengers a day, as compared with the 30,000 a day they say is needed to make TGV technology economical.

Financing: Proposal envisages the creation of a public/private partnership, with private investors providing approximately 60% of the total investment. Further details not specified.

Strengths: Company has a proven record with both high speed and conventional rail projects in Italy and elsewhere. Proposal doesn't lock Florida into a particular technology, but essentially calls for further study of Florida's options.

Weaknesses: Business plan is vague on technology, financing, service and marketing, and as such may not be responsive to Florida's request for proposals.

Prospects: Vagueness of proposal, and lack of local political clout, make Italferr a long shot.

V. Rail Florida
6500 North Andrews Ave., Suite 200, Fort Lauderdale, 33309 (954) 772-2524
R. Redding Stevenson, Jr., president.

Corporate Structure: Consortium led by Raytheon Infrastructure Services Corporation, in concert with Keith and Schnars, P.A., ABB Traction, Inc., and Amtrak.

Technology: Danish-designed diesel Flexliners starting in 1997; Swedish X-2000 tilt-train after 2016.

Top scheduled speed: 79 mph (1997); 125 mph (2016) Travel Times: Tampa/Miami (non-stop): 3 hours 20 min. (1997); 2 hours 19 min. (2016).

Frequency of Departure: (1997) Four trains each way daily, Sanford/Orlando/Tampa. Two trains each way daily, Tampa/Miami and Orlando/Miami.

Construction Schedule: Flexliner service begins in 1997.

Fares: (coach class): Miami/Orlando: $35-$85. Tampa/Orlando: $20-$35.

Projected Ridership: 347,000 (1997); 1,332,200 (2004); 2,542,800 (2016). Financing: Initial train service to be funded by $25 million from state. Improved service in future to be funded by an annual $70 million state subsidy. Total state appropriations come to $3.5 billion between 1997 and 2021. In addition, Florida Department of Transportation floats tax free bonds totaling $3.9 billion between 2000 and 2016. Annual debt service increases from $48 million to $196 million over period. Total capital cost of full-scale project: $7.4 billion. Net operating revenues from the project are committed to repayment of debt, with the state responsible for any shortfalls. State has ownership of most project assets. Additional funding from local governments for some stations is envisioned. Federal funding will also be sought, but is not considered essential. System is expected to run operating deficits through 2013, when it is expected to begin running operating surpluses.

Strengths: Experienced management. Also, through affiliation with Amtrak, has a statutory right to operate passenger trains on freight railroads, which could prove useful in negotiations for trackage rights. Would use proven technology. Travel time between Tampa and Miami beats TGV due to more direct route, and for a fraction of the cost. Project also offers early start-up for revenue service and requires only incremental commitments of capital. Principals claim their low tech solution offers the most bang for the buck.

Weaknesses: Trains will run over 487 grade crossings between Tampa and Miami, creating a potential safety hazard. (In 1994, with no trains in the state running faster than 79 mph, there were 114 grade-crossing accidents in Florida, resulting in 16 deaths and 46 injuries.) Though grade-crossing accidents could be mitigated with the use of special hi-tech gates, motorists might well be irritated by the fact that these gates would need to close at least 90 seconds before the train arrived. Also, travel times may not be sufficiently fast to induce heavy ridership. Must share right-of-way with freight trains. Use of conventional train technology may not inspire public.

Prospects: Members of team have long experience with Florida's various high speed rail efforts and good contacts with state transportation officials. Low cost and fast start-up give proposal political appeal.

Tags: Florida Small Business, Politics & Law, Business Florida

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